Calculate the after-tax return of a(n) 5.625.62 percent, 20-year, A-rated corporate bond for an investor in the 1515 percent marginal tax bracket. Compare this yield to a(n) 3.683.68 percent, 20-year, A-rated, tax-exempt municipal bond, and explain which alternative is better. Repeat the calculations and comparison for an investor in the 3535 percent marginal tax bracket. Question content area bottom Part 1 The after-tax return of the 5.625.62%, 20-year, A-rated corporate bond for an investor in the 1515% marginal tax bracket is enter your response here%. (Round to two decimal places.) Part 2 Compare this yield to the 3.683.68%, 20-year, A-rated, tax-exempt municipal bond and explain which alternative is better. (Select the best answer below.) A. The after dash tax yield of 4.78 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 4.78% for the corporate bond is a better alternative than the 3.68% tax-free municipal bond at the 1515% tax rate. B. The 3.68 % tax dash free municipal bond is a better alternative than the after dash tax yield of 4.78 % for the corporate bondThe 3.68% tax-free municipal bond is a better alternative than the after-tax yield of 4.78% for the corporate bond at the 1515% tax rate. Part 3 The after-tax return of the 5.625.62%, 20-year, A-rated corporate bond for an investor in the 3535% marginal tax bracket is enter your response here%. (Round to two decimal places.) Part 4 Repeat the calculations and comparison for an investor in the 3535% marginal tax bracket. (Select the best answer below.) A. The after dash tax yield of 3.65 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 3.65% for the corporate bond is a better alternative than the 3.68% tax-free municipal bond at the 3535% tax rate. B. The 3.68 % tax dash free municipal bond is a better alternative than the after dash tax yield of 3.65 % for the corporate bondThe 3.68% tax-free municipal bond is a better alternative than the after-tax yield of 3.65% for the corporate bond at the 3535% tax rate.

Calculate the after-tax return of a(n) 5.625.62 percent, 20-year, A-rated corporate bond for an investor in the 1515 percent marginal tax bracket. Compare this yield to a(n) 3.683.68 percent, 20-year, A-rated, tax-exempt municipal bond, and explain which alternative is better. Repeat the calculations and comparison for an investor in the 3535 percent marginal tax bracket. Question content area bottom Part 1 The after-tax return of the 5.625.62%, 20-year, A-rated corporate bond for an investor in the 1515% marginal tax bracket is enter your response here%. (Round to two decimal places.) Part 2 Compare this yield to the 3.683.68%, 20-year, A-rated, tax-exempt municipal bond and explain which alternative is better. (Select the best answer below.) A. The after dash tax yield of 4.78 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 4.78% for the corporate bond is a better alternative than the 3.68% tax-free municipal bond at the 1515% tax rate. B. The 3.68 % tax dash free municipal bond is a better alternative than the after dash tax yield of 4.78 % for the corporate bondThe 3.68% tax-free municipal bond is a better alternative than the after-tax yield of 4.78% for the corporate bond at the 1515% tax rate. Part 3 The after-tax return of the 5.625.62%, 20-year, A-rated corporate bond for an investor in the 3535% marginal tax bracket is enter your response here%. (Round to two decimal places.) Part 4 Repeat the calculations and comparison for an investor in the 3535% marginal tax bracket. (Select the best answer below.) A. The after dash tax yield of 3.65 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 3.65% for the corporate bond is a better alternative than the 3.68% tax-free municipal bond at the 3535% tax rate. B. The 3.68 % tax dash free municipal bond is a better alternative than the after dash tax yield of 3.65 % for the corporate bondThe 3.68% tax-free municipal bond is a better alternative than the after-tax yield of 3.65% for the corporate bond at the 3535% tax rate.

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 7FPE: An investor in the 22 percent tax bracket is trying to decide which of two bonds to select: one is a...

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Question content area bottom

Part 1

The after-tax return of the

5.625.62%,

20-year, A-rated corporate bond for an investor in the

1515%

marginal tax bracket is

enter your response here%.

(Round to two decimal places.)

Part 2

Compare this yield to the

3.683.68%,

20-year, A-rated, tax-exempt municipal bond and explain which alternative is better. (Select the best answer below.)

The after dash tax yield of 4.78 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 4.78% for the corporate bond is a better alternative than the 3.68% tax-free municipal bond

at the

1515%

tax rate.

The 3.68 % tax dash free municipal bond is a better alternative than the after dash tax yield of 4.78 % for the corporate bondThe 3.68% tax-free municipal bond is a better alternative than the after-tax yield of 4.78% for the corporate bond

at the

1515%

tax rate.

Part 3

The after-tax return of the

5.625.62%,

20-year, A-rated corporate bond for an investor in the

3535%

marginal tax bracket is

enter your response here%.

(Round to two decimal places.)

Part 4

Repeat the calculations and comparison for an investor in the

3535%

marginal tax bracket. (Select the best answer below.)

The after dash tax yield of 3.65 % for the corporate bond is a better alternative than the 3.68 % tax dash free municipal bondThe after-tax yield of 3.65% for the corporate bond is a better alternative than the 3.68% tax-free municipal bond

at the

3535%

tax rate.

The 3.68 % tax dash free municipal bond is a better alternative than the after dash tax yield of 3.65 % for the corporate bondThe 3.68% tax-free municipal bond is a better alternative than the after-tax yield of 3.65% for the corporate bond

at the

3535%

tax rate.

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